Number of RIAs Jumps Slightly Despite Registration Switch

IAA and NRS report finds that the total RIA count rose slightly from last July despite the switch to state registration.

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The total number of advisors registered with the Securities and Exchange Commission managed to tick up slightly from 10,511 last July to 10,533 as of April despite the fact that 2,000 federally registered advisors completed their switch to state registration, according to the Investment Adviser Association and National Regulatory Services just-released Evolution/Revolution report.

The 2,000 SEC registered advisors with from $25 million to $100 million AUM who switched to state registration under the Dodd-Frank Act were replaced by 1,500 “private fund advisors” under the Investment Advisers Act who became newly registered investment advisory firms with the Commission, according to the 13th annual report.

While the latest total is a significant drop from 11,539 who were SEC-registered in 2011, SEC-registered investment advisors in 2013 reported $54.8 trillion in aggregate regulatory assets under management, a substantial increase of 10.9% from $49.4 trillion in 2012.

“Our report underscores the fact that the Dodd-Frank Act has had a profound effect on the composition of the investment advisory profession,” said David Tittsworth, executive director of the IAA, in a statement. “The law has shifted regulatory responsibility for hundreds of smaller firms to the states, while requiring larger private fund advisors to register with the SEC. These dramatic shifts have yielded a net decrease in the number of SEC-registered investment advisory firms. However, many of the core characteristics of the advisory profession remain fairly constant.”

Other key findings from the report, which are based on information on file with the SEC as of April 12, include:

SEC-registered investment advisors in 2013 reported $54.8 trillion in aggregate regulatory assets under management (RAUM), a substantial increase of 10.9% from $49.4 trillion in 2012. This increase is particularly notable given that the number of SEC-registered investment advisers has not changed significantly. This increase in RAUM managed by advisors may be attributable to both rising markets and organic growth in the industry, evidenced by the increase in the number of clients served.

More than one-third of all SEC-registered advisors (38.1%) reported that they manage at least one private fund. Private fund advisors reported a total of 26,752 private funds with collective RAUM of $8.5 trillion – up from $8.1 trillion in July 2012.

Melanie Waddell

Melanie is Washington Bureau Chief, Investment Advisory Group. She also covers regulatory and compliance issues and writes The Playing Field column and Human Capital briefing. Reach her at mwaddell@alm.com. On twitter: @Think_MelanieW

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